Modi has to overcome policy hurdles to deliver on his promises

Modi wins the perception war in the US. Now, he has to overcome policy hurdles to deliver on his promises.

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Pranab Dhal Samanta

October 2, 2014

ISSUE DATE: October 13, 2014

UPDATED: October 3, 2014 10:21 IST

Barack Obama and Modi en route to the Martin Luther King Jr Memorial.

It was not in ideology but in method where Prime Minister Narendra Modi and US Barack Obama discovered common ground over dinner on September 29, a day before their formal meet.

Modi admired Obama's use of social media as a tool for political mobilisation and elaborated on how he had deployed the same during his Lok Sabha campaign. Certain key members of Obama's social media team, who were also at the dinner, picked on the conversation and suddenly from nowhere came an idea that may be the two leaders should do something together, something political with wide social media appeal.

Visiting Martin Luther King Jr's Memorial together offered the perfect choice. Modi was slated to visit the memorial by himself the next morning. But as a fallout of some excited dinner table talk, it was decided that both leaders will travel together in Obama's limousine to King's memorial after official talks that afternoon.

In a nutshell, this captured the strong political overtones that underpinned Modi's visit to the United States, one which was aimed at making a subtle power statement that India mattered in American domestic politics and, by extension, so did its extremely popular PM. That, insiders said, was the purpose which the Madison Square Garden event achieved, an organised effort of the kind which American politicians associate with Jews and its powerful lobby groups like the American Israel Public Affairs Committee. As a result, presidential hopefuls such as Hillary Clinton and New Jersey Governor Chris Christie made it a point to meet Modi in New York. And, according to reliable sources, Maryland Governor Martin O' Malley, another hopeful from the Democrat camp, had to be accommodated at the last moment in Washington DC. A photo-op with Modi, the Indian camp would like to believe, had high-grade political value, which by itself made for a good strong start.

This is also reflected in the India-US joint statement which contains an American promise to partake in each of Modi's key initiatives from smart cities to 'Make in India' and the 'Clean India' campaigns. Then, there is an explicit commitment to crack down on anti-India terror groups including the "D-Company". Even though the US has already blacklisted these entities, specific mention in a bilateral document has its own perception advantage in terms of sending out a strong domestic message.

But there is a story in the fineprint too, where the US has also extracted some crucial commitments from Modi, especially a promise to deliver on civilian nuclear cooperation and-with specific mention-projects by Westinghouse and GE Hitachi. This puts the Modi Government on test because going by the liability law provisions, the US companies have indicated very high upper limit costs of per unit power, almost twice that of what Russia has agreed to in Kudankulam. Both sides have agreed to form a contact group to take this conversation forward. So, in short, by putting N-liability issue upfront, US has turned it into a measure of the new Government's commitment to further the business relationship.

Much of the long-term US investment plans for India are linked to policy decisions. In defence, India will have to think beyond 49 per cent FDI limit for far-reaching hi-tech co-production ventures. Similarly, in insurance, Modi has to overcome a battle in Parliament-and then the issue of FDI in retail where he has to broach the subject with his own party, just as on the N-liability issue.

To begin with, the attempt seems to be to skirt policy hurdles for the moment. So, for instance, in higher education, online platforms for US universities to offer courses are being seen as a way to start. Ultimately, however, the hope is that this will lead to a more liberal FDI regime in the sector. Here is where Modi has raised a range of expectations on policy deliverables-a measure on which will rest the PM's own international credibility in the long run. Follow the writer on Twitter @pranabsamanta